|“Rules of origin” are the criteria used to define where a product was made.
They are an essential part of trade rules because a number of policies discriminate between exporting countries: quotas, preferential tariffs, antidumping actions, countervailing duty (charged to counter export subsidies) and more.
Rules of origin are also used to compile trade statistics, and for “made in ...” labels that are attached to products. Complicating factors are globalisation and the fact that a product can be processed in several countries before it is ready for the market.
The Rules of Origin Agreement, which is part of Annex 1A to the Agreement Establishing the WTO, requires WTO members to ensure that their rules of origin are transparent; that they do not have restricting, distorting or disruptive effects on international trade; that they are administered in a consistent, uniform, impartial and reasonable manner; and that they are based on a positive standard (in other words, they should state what does confer origin rather than what does not).
For the longer term, the Agreement aims for common (“harmonised”) rules of origin among all WTO members, except in some kinds of preferential trade - for example, countries setting up a free trade area are allowed to use different rules of origin for products traded under their free trade agreement.
The Agreement establishes a harmonisation work programme, based upon a set of principles, including making rules of origin objective, understandable and predictable. The work was due to end in July 1998, but several deadlines have been missed. It is being conducted by a Committee on Rules of Origin in the WTO and a Technical Committee under the auspices of the World Customs Organisation in Brussels. The outcome will be a single set of rules of origin to be applied under non-preferential trading conditions by all WTO members in all circumstances.
An annex to the Agreement sets out a “common declaration” dealing with the operation of rules of origin on goods that qualify for preferential treatment.|